Making an IT budget seems to grow more complicated every year. Technology gets more complicated, prices change, needs change and consumers expect more for less. It’s possible to keep up with everything, but only through dedication and hard work.
The first step on that journey is acquiring knowledge, so we have a detailed breakdown of IT spending trends for 2018. Learn what everyone is doing, and it can inform your decisions to help you make the most of the next year.
An IT conglomerate group surveyed thousands of IT buyers and departments across North America and Europe. Their goal was to analyze spending trends and expectations for 2018. These are the trends they found in all industries:
Increasing budgets. A full 44 percent of companies are increasing their IT budgets. Another 43 percent are keeping budgets steady, and only 11 percent expect to shrink IT spending. Among companies increasing IT spending, the average total rise is at 19 percent.
Growing Revenues. Among those same respondents, 60 percent are expecting revenue increases over the next 12 months. This is the main driver for expanding IT among large businesses (more than 500 employees).
End of Life. The top motivator for small businesses is to replace outdated technology. Upgrades and improving the user experience rates as high motivators for businesses of every size.
Knowing how much competitors are likely to spend on IT is only the first step. From here, we’ll break down that spending to see what are the primary targets and how to stay ahead of the curve.
The biggest money will be put towards hardware. This is true regardless of company size and industry. We’ll look at what hardware is being purchased in more detail in a moment, but it is the top seller. Software still comes in second, accounting for 26 percent of new spending. Following that is cloud services at 21 percent and managed services at 15 percent. It is also worth noting that 45 percent of all companies are increasing their IT staff, whether it is in-house or outsourced.
Since hardware is getting the largest share of new spending, we’ll start here. The bulk of new hardware will be comprised of desktops, laptops and servers. Large companies will be spending more on servers and maintaining them. Desktops are the top buy for smaller and mid-sized businesses. Networking is the fourth big seller, representing eight percent of budget increases.
Software is another major player, and it is centered on stability, security, and productivity. In fact, the split looks like this: 11 percent of software spending will be on operating systems, 10 percent will be on security, 10 percent on productivity and 9 percent on virtualization. The rest is split between software like developer tools, data management, specific apps and IT management. The breakdown by business size shows that smaller companies are focused on productivity while larger corporations prioritize virtualization and databases.
The first thing to note about cloud spending is that it is the fastest growing segment of IT spending. While budgets are climbing across the board, the cloud is taking a larger share of the total pie in 2018. This trend is likely to continue for the next several years. Still, we want to know how cloud services are being utilized. The top priority is online backup and recovery, accounting for 15 percent of all cloud spending. Productivity and email hosting are second and third at 10 percent and 9 percent, respectively. The rest of the breakdown looks similar to software and centers around security, hosting, developer tools and specific apps.
Managed services showed the biggest disparity by company size. It’s long been a trend that smaller businesses are more likely to outsource IT, and large groups are more likely to keep IT staff on hand. This trend is also true for services like web and email hosting, data management, hardware support, and security. These also happen to be the largest portions of new spending on managed services. Small businesses in 2018 are ramping up their online presence, and doing so requires additional spending on data and security.
The most frequent questions we field have to do with Internet of Things (IoT), artificial intelligence (AI) and other aspects of big data. It’s a major driver in IT, and it grows every year. In 2018, those trends are accelerating. Already, 29 percent of companies in every industry have already adopted IoT. Following that, 18 percent have invested in virtual reality (VR), and 13 percent are already incorporating some level of AI. By the end of 2018, we expect to see a 19-percent increase in IoT spending, a 14-percent increase in VR and 17-percent growth rate for AI.
We just threw a lot of data at you, and none of it applies uniformly to all businesses. There are a few, simple takeaways. First, if you want to grow your business this year, you will need to consider boosting your IT spending. Depending on your goals and business size, you can focus that spending to outperform the competition. If you’re running a small business, you might be able to cut corners on hardware by utilizing more cloud solutions.
Maybe it’s time to start incorporating big data solutions. The real point is that generalizations aren’t enough.
If you haven’t already, it’s time to change from a simplified IT budget to a long-term spending plan. When you make use of expertise and search for ways to spend more efficiently than your competition, you make room to grow faster and stay ahead. The trends in 2018 are promising for most businesses. Get as much as you can out of it.
About the Author: Chantel Soumis
Chantel Soumis brings over a decade of knowledge in workflow enhancement through the use of technology. Chantel studied marketing communications and business administration at Franklin University and proceeded to work in a fast, ambitious environment, assuring client delight in the healthcare and pharmaceutical industries. Passionate about project productivity and streamlining workflows through the use of technology, Chantel strives to inform organizations of Valicom’s advanced telecom expense management software and services by mastering communications and messaging while delivering helpful information and supporting resources.